NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has assigned an 'AA+' rating to Forsyth County, North Carolina's (the county) estimated $15 million limited obligation bonds (LOBs), series 2009. The LOBs are scheduled to price via negotiated sale on Dec. 9, 2009. The bonds will mature serially from April 1, 2011 through 2025 and have a term maturity on April 1, 2030 and will finance public safety facilities. In addition, Fitch has affirmed the following outstanding general obligation (GO) and certificates of participation (COP) ratings for the county:

--$420 million outstanding GO bonds at 'AAA';

--$70 million COPs at 'AA+'.

The Rating Outlook is Stable.

The 'AA+' rating on the LOB's reflects the county's underlying credit characteristics, appropriation risk associated with county payments, solid legal provisions, and the essentiality of the financed projects, which are subject to a lien. The 'AAA' outstanding GO rating reflects the county's strong finances and management, increased economic diversification, moderately low debt, and healthy income levels. Continued expansion of biotechnology, health care, leisure and hospitality, and financial activities is producing a diversified economy that can absorb decreases in manufacturing employment. Projected population and assessed valuation growth are expected to help maintain a manageable debt burden despite infrastructure demands attributable to population growth.

Debt service payments for the LOBs are subject to annual appropriation. As security for the bonds, the county will deliver a deed a trust granting a lien on mortgaged property, consisting of the building to be purchased for the public safety complex, whose essentiality provides sufficient incentive to appropriate. Were a default to occur, the deed of trust authorizes the trustee to foreclose on the mortgaged property.

Located in the Piedmont region in central North Carolina, Forsyth County is one of the state's major commercial and industrial centers. Increased economic diversification has offset the decline in textile and apparel manufacturing. Expansion at the Piedmont Triad Research Park (PTRP), the state's second largest biotechnology cluster, is expected to generate an additional 27,000 jobs over the next two decades. Bolstering the park and providing the necessary work force are two major medical facilities (Wake Forest University Baptist Medical Center, employing 11,400, and Novant Health, which employs 7,500 at three area hospitals), as well as a number of local universities. Fitch Ratings believes that the recently announced closing of the Dell, Inc. (about 900 employees) and Hanesbrands Inc. plants (240) will not significantly impede the county's economic expansion. The recently high unemployment rate has started to moderate somewhat to 9.5% in September 2009 below the state's and at the national levels. Income levels are slightly above the state's and at the national averages.

Financial management, planning, and performance are exceptionally strong. The unreserved general fund balance at the end of fiscal 2008 was a strong 23.6% of general fund spending, while the $120 million total fund balance equaled 33% of spending. A fiscal 2008 tax rate hike to offset planned increases in out-year debt service has resulted in an additional $9 million of fund balance for fiscal 2009, which the county will designate for future debt service. The fiscal 2010 budget incorporates the modest expenditure reductions initiated in fiscal 2009 and assumes minimal use of fund balance. Following several years of projected growth in the designation for future debt service, the county expects to draw down its unreserved fund balance closer to the 16% policy level, using the balance for debt service and one-time capital costs.

Debt levels are moderately low and should remain so. Overall debt equals 2.3% of market value and $2,329 per capita, and amortization is above average at 59.9% in 10 years. The $389 million county CIP through fiscal 2020 relies on bond funding for 93% of its financing. The CIP total is well below the $509 million of the fiscal years 2008-2018 CIP, although changes in projects' timeframes have historically resulted in large variances among CIPs. The county projects that debt service will rise as high as 13.3% of spending after allowing for offsetting by lottery proceeds and reach 14.9% assuming full implementation of planned CIP financing. This is at the upper limit of the county's informal goal of 10%-15%; the county intends to update its existing 10% limit in the near future.

Additional information is available at www.fitchratings.com.

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